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I hope everyone had a good Christmas and New Year! Mine was… interesting… to say the least, as I was visiting my brother’s in-laws in the South of Italy. Highlights of the stay included helping with the slaughtering of two pigs and processing the meat for salami and hams! Very cultural to say the least, and, believe it or not, a very welcome break from IT Asset Management.

But anyway… back to work.

Subscription licenses, support and maintenance all have one thing in common – that is, they need to be renewed regularly.  Like perpetual licenses, the rights involved are intangible assets, which means not only can it be difficult to prove that they have indeed been legally purchased, but unlike perpetual licenses, the right to use the software and take advantage of support and maintenance needs to be renewed, usually by means of a contract renewal and payment of a sum of money, on a regular basis.

Let’s look at these beasties in more detail.

Subscription Licenses

Are, like an ordinary perpetual license, the right to use a piece of software within the terms and conditions in the contract.  If the subscription is not renewed at the end of the period, then the right to use the licenses expires. Sometimes an option to convert the subscription licenses to perpetual licenses is included, generally, of course, exercisable on the payment of more money!

In addition to all the standard SAM dangers of over-installation and under-licensing, there is the additional danger that the contract is not legally renewed and so the right to use the software lapses without the organisation being aware they are no longer compliant.

Subscription licenses are becoming more common with the advent of Software as a Service and Cloud computing. These application delivery technologies allow the software manufacturer much greater control over who uses the software and when, therefore reducing the risk of a subscription lapsing while the company continues to use the software.

Support and Maintenance

I’ve discussed support and maintenance in the context of ITAM lifecycles before, but lets look at them in more detail from a management point of view.

In an IT context, Support Contracts give an organisation the right to contact the support provider for assistance if they experience any problem installing, using, upgrading or de-installing a product (whether hardware or software), while maintenance contracts give an organisation the right to request that a piece of hardware be repaired if it breaks down, or in a software context, to install software patches and bug fixes. Occassionally maintenance contracts will also include the right to free software upgrades, but as always,  it depends on the detail of the contracts!

Support and maintenance contracts are often purchased together. While software Support and Maintenance is almost always purchased from the Software Manufacturer, hardware Support and Maintenance contracts can be purchased from independent third parties who may offer lower prices and/or better service than the original manufacturer.

Support and maintenance contracts generally run for a period of either one or three years. Discounts are often given if the contract is taken out for the longer period.

Although the financial risk in accidentally letting a support and maintenance contract lapse is not generally as high as with accidentally letting a software subscription license lapse, there are still significant risks involved.

First and foremost are the service management risks inherent with something going wrong with the hardware or software and not having an expert available to help resolve it quickly and with minimal disruption to service levels.

Because Support and Maintenance are such important revenue streams for software manufacturers, who also have a monopoly on providing the support and maintenance, the software manufacturers also have the ability to demand continuity of support and maintenance for their products. By this I mean (and in contrast to hardware manufacturers where there is thriving competition in support and maintenance provision) they have the commercial power to demand that any software that is supported should be supported continuously throughout its life. There will often be penalty charges to bringing licenses back into support if the support contract has been allowed to lapse at any point in time. Some manufacturers, particularly of high-value software, will also insist on an ‘all or none’ policy for currently used licenses, meaning that if the support on one currently used licenses lapses, it invalidates the support on ALL currently used licenses. Not only is that a huge service management risk, it is also a financial risk, as you may have paid a large sum of money in supporting several such licenses, only to have it invalidated because support on one license was missed in the renewal process.

As you can see, managing renewals of subscription licenses and support and maintenance is not only very important, but also poses a challenge because of the intangible nature of the rights purchased and the need for renewal of the rights on a regular basis. The next couple of posts will look at techniques to help manage these contracts.